AMD has been struggling as of late and their latest financial results point to a situation that is looking quite bleak, particularly for the APU business.

One of the main challenges faced by technology companies in this day and age is staying profitable, regardless of the market’s troubling waters. While many (including Intel and NVIDIA) have faced declines in their revenue streams, they have come through 2012 largely unscathed due to their relatively large amounts of on-hand cash and their continued strength with OEMs. Unfortunately, the same can’t be said for AMD, which, after several restructuring efforts has gone from minor profits to operating losses.

According to AMD’s Q3 financial results their revenue of $1.27 billion represents a reduction of 10 percent over the previous quarter and a steep year over year decline of 25 percent. There is also an operating loss of some $130 million. AMD’s CEO Rory Read admits that AMD was caught somewhat flat footed by the rapidly changing conditions:

”The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,” said Rory Read, AMD president and CEO. ”It is clear that the trends we knew would re-shape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are designed to simplify our product development cycles, reduce our breakeven point and enable us to fund differentiated product roadmaps and strategic breakaway opportunities.”

Buried within the financials are other troubling items as well. Due to “weaker than expected demand” AMD was forced to take a $100 million inventory write down on Llano APU parts. In plain English this means large numbers of Llano APUs remained unsold or had their prices prematurely reduced in an effort to increase sales. This doesn’t bode particularly well for their new Trinity processors as it seems AMD’s “Fusion” initiative is not resonating with end users or OEMs.

The generally weak buying market didn’t help things either as AMD reported that sales to OEMs and across-the-board pricing for their products decreased by significant amounts as well.

Unlike within previous quarters, the graphics division wasn’t spared from the bloodletting either. Their sales were down 7 percent from the previous quarter and 14 percent year over year. However, this division did provide some of AMD’s financial high points since lower shipments to OEMs were offset by end-user higher channel sales and the average selling price for their GPUs has seen an average increase. So even though OEMs don’t seem to be high on AMD’s graphics cards, direct sales to end users through standard retail channels are doing better than expected.

So what does this mean for AMD and their employees? Unfortunately, the dreaded “restructuring” word was an integral part of today’s financial statement and that means layoffs. Previous rumors had workforce reductions pegged at nearly 30% but it seems like that number was overly high. As it stands, AMD is looking to reduce up to 15% of their workforce before the end of this quarter. That is still a significant reduction and we have to wonder how day to day operations, marketing and engineering are expected to continue apace after the cuts from the last 18 months.

There was also a mention of site consolidations but details about this effort were largely missing from the initial press release. It could very well represent further moves away from ATI’s formerMarkhamheadquarters to AMD’s mainAustinfacility.

Not surprised on the write down for the Llano chips, they should have put Trinity on the FM1 package. With no upgrade path for FM1 processors, customers, even those right in the target market, didn’t bite.

Actually I have no issues with my APU for gaming; but it’s quite obvious you’re an Intel fanboy. Not that I’m saying an i5 2500k can’t outright flatten even the A8 overclocked, that i5 is also $120 more expensive, a $120 that could be put towards a solid state drive, which quite honestly will show a better value and day to day performance for your money than an i5 and a 7200rpm drive. Food for thought.

Agreed. Trinity going to FM2 has lost them a sale with me. I was planning on upgrading my first gen Llano to Trinity when it came out, now I’m going to just wait it out and probably convert to Intel or AM3+

No I am actually an AMD fanboy that is disgusted to see how Intel CPU crush AMD CPU. An i7 3570K is almost two times faster than a FX-8150 in some games. When overclocked the Fx-8150 draws 3 times more power than an oveclocked i7 3570K. Such poor performance is just pitiful. I would like a lot to build a new AMD PC, but their CPU are just too bad, I can’t. I will have to stick to Intel again. This will be only the second time that I buy an Intel CPU, whereas I bought a lot of AMD CPU. But I have no choice. Shame on you AMD.

Hey all, I have been an ati/amd/Radeon fan for a long time! my first card was rage32mb and so on until…
I bought a 5870 on release day!
never used amd cpu’s because of notorious heat but I loved the apu idea! I think I came up with it months earlier than amd in a notebook of mine but whatever, they havent really done much with it. i think people would want a higher performance all in one chip than they’ve offered regardless of thermal envelope. my idea was to implement this into game consoles but I havent seen amd partner up with anyone and do it! wtf, get on it!
the latest amd cpu launches have been a major let down and I feel the graphics department is slipping, my new build this week will consist of 3570k and gtx680. i’ll always have a spot in my heart for amd but I’m eagerly waiting a huge innovation like the 5870 was.
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